L&T Technology Services Ltd's Q3FY19 consolidated net profit declines 2.9% qoq to Rs186cr: Beats Estimates

The company’s consolidated revenue in the quarter stood at Rs1,317cr, up 4% qoq and 35.9% yoy.

Jan 17, 2019 12:01 IST India Infoline Research Team

L&T Technology Services Ltd Q3FY19

Consolidated Results Q3FY19: (in Rs cr)

Q3FY19 QoQ (%)
Revenue 1,316.90 4.0
EBIT 217.80 7.9
EBIT Margin (%) 16.5 59
Net Profit (adjusted) 185.60 [2.9]
***EBIT margin change is bps
L&T Technology Services Ltd (LTTS) reported an in-line set of numbers on all fronts for Q3FY19. The revenue in rupee terms grew 4% qoq to Rs1,317cr, higher than the median consensus estimates of Rs1,315cr. USD revenue grew 4.8% qoq to USD186mn. EBIT came in at Rs218cr, up 7.9% qoq against the median consensus estimates of Rs214cr. EBIT margin expanded 59bps qoq to 16.5%. Reported PAT after minority interest came in at Rs186cr, down 2.9% qoq against the median consensus estimate of Rs178cr.
  • US dollar revenue growth in constant currency was at 4.6% qoq.
  • Growth was aided by sustained momentum in the transportation (+3.9% qoq) and process industries (6.1% qoq) and also on recovery in telecom (+6% qoq), which had shown weakness in the past quarter.
  • Industrial products and medical devices were up 2.8% qoq and 8% qoq, respectively.
  • In terms of geographies, North America (+5% qoq) and India (+21.3% qoq) drove growth while Europe and RoW declined  1.3% qoq and 3.9% qoq, respectively.
  • Utilizations improved to 81.3%, up 100bps qoq.
  • Top-5 clients grew 1.8% qoq while Top-10 and Top-20 grew 2.2% qoq and 3.5% qoq, respectively. This is reflective of continuous focus on growing revenues across top clients.
  • Revenues from digital & leading-edge technologies increased to 34%.
  • LTTS won eight multi-million dollar deals across all industry segments in Q3FY19.
  • LTTS has increased its USD50mn+ clients by two; USD10mn+ clients by four; and its USD5mn+ clients by 10.

We expect the stock to react positively on account of its technological capabilities and its ability to move the clients up the revenue buckets. LTTS has enough headroom to drive up wallet share gains across clients by cross-selling its services. We feel that LTTS should continue to lead the industry across all elements, and hence, we remain positive on the stock.

Technical View:

L&T Technology Services Ltd ended at Rs1,689.45, up 38.9 points, or 2.36%, from its previous close of Rs1,650.55 on the BSE. The scrip opened at Rs1,660 and touched a high and low of Rs1,700.60 and Rs1,646.65, respectively. A total of 1,50,676 (NSE+BSE) shares were traded on the counter. The stock traded below its 100-DMA.

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